Will Europe Face a Blend Wall?

By Robert Vierhout | March 11, 2011

If there is one thing we in Europe can learn from the U.S.A. on tearing down the blend wall, it is that Europe should start addressing the issue now. Delaying the discussion could result in serious structural problems for the industry as we now see happening in the U.S. Kick starting the debate on changing the law that would allow a higher blending percentage beyond E10 percent to avoid such a wall is not that simple, however.

Many will argue against it by saying that the 10 percent renewable energy target is only for 2020 and others would mention the relatively low blending levels achieved to date of less than 5 percent. So, why the rush? Car manufacturers would be cautious, of course, and oil companies might have some strong reservations as well. Finally, there is the group of stakeholders who would see the possibility of higher blending levels as a new incentive to increase biofuel production and use something that could cause unwanted effects in land use and food crop availability.

The climate to start lobbying for higher blend levels is therefore not optimal. Still, there are some indications that waiting would not be the smartest thing to do.

The EU member states have now all published their so-called renewable energy action plans telling us what sort of renewable energy sources they will use to fulfil the 10 percent target. Nothing spectacular came out of this exercise. As to be expected, it was an extrapolation of existing practice: the majority share for biodiesel, around 25 percent for ethanol and a marginal share for electricity and second generation fuels. This very big share of biodiesel and very low share of other green sources could prove an opportunity for ethanol, however. In the EU, the most questioned biofuel is biodiesel because of the high volumes of vegetable oil needed, typically rapeseed, soy and palm. Using higher blends of ethanol could provide a way out of this feedstock dilemma. Interestingly enough, this also seems to be a serious option for the both car and oil industries.

The scientific branches of these two industries, together with the EU Joint Research Centre, embarked on a joint biofuels program looking at the potential for biofuels and other alternative energy sources to achieve the 10 percent target. They built an analytical tool called the Fleet and Fuels Model that projects the vehicle fleet until 2020 based on historical road fleet data, resulting in fuel demand projections. In several of the nine fuel demand scenarios modelled, targets could only be achieved if ethanol use would go beyond 10 percent volumetric blending.

Whether one of these ethanol-friendly scenarios will materialize soon is unlikely if it depends on the researchers. Even though all cars from 2005 onwards can run on an E10 blend, compatibility with higher blends would require “time, testing efforts and investment” according to the report, soon to be published in its final form. In other words, the auto and oil industries are saying don’t expect any time soon that we can go beyond what is now possible under the law. This rather reluctant stance on blends greater than E10 could convince regulators that the targets are overly ambitious and might need to be re-assessed.

Knowing that the car industry will likely go for the filibuster-strategy, the ethanol industry should not adopt a let’s wait-and-see-option. It took years to go from an E5 standard to E10. We now see the slow introduction of E10 in several countries such as France, Germany and Sweden, but it will take until at least 2017 before E10 will be the standard gasoline.

If we do not start working on an E15 or E20 standard now, we will not have anything beyond E10 in place before 2020 besides, of course, E85. But knowing how little E85 is beloved by oil companies it doesn’t seem a promising way forward. E85 is and will stay a niche market. I am certain that in a few years from now, the blendwall will be our main issue to deal with.